2Q16 PATMI decreased 36.6% YoY to S$294.0m mainly due to lower fair revaluation gains from properties. We highlight that, in 2Q15, there was a one-off fair value gain of S$125.9m from the change of use of development projects, excluding which the group’s adjusted operating PATMI in 2Q16 would have risen 31.8% to S$171.6m given firmer performances from Chinese shopping malls and developments, contributions from CapitaGreen and the group’s serviced residences business.

In terms of the topline, group revenues increased 9.7% to S$1,131.7m for the quarter due to strong contributions from the property development segment in China and Singapore and higher income from CapitaGreen and the group’s serviced residence business. Over the quarter, the group recognized progress billings from Cairnhill Nine in Singapore and in China, The Paragon in Shanghai and Vermont Hills in Beijing.

Overall, we judge this quarter’s numbers to be broadly in line with expectations, and 1H16 revenues and PATMI now constitute 48.9% and 57.5% of our full year forecast, respectively. Maintain BUY with an unchanged fair value estimate of S$3.68.

Source: OCBC Research - 4 Aug 2016